Child Care and Development Fund Payment Rates

Today, the Office of Child Care (OCC) issued letters to Child Care and Development Fund (CCDF) state and territory Lead Agencies that they are considered out of compliance with the equal access provision of the Child Care and Development Block Grant (CCDBG) Act if their child care subsidy payment rates are set below the 50th percentile of their most recent market rate survey. A key principle of the CCDF is that Lead Agency payment policies must provide equal access to for children receiving child care assistance as children in families with incomes too high to qualify and to ensure parental choice by offering a full range of services. Low CCDF payment rates do not support equal access and make it particularly difficult for families with low incomes to afford child care that meets their needs. Low rates also make it difficult for providers to recruit and retain skilled staff and provide high-quality care and they undermine child care stability and child care supply. 

Raising rates to at least meet this minimum percentile will help parents that receive CCDF child care assistance have more choice in finding care that meets their family’s needs. For this reason, OCC continues to recommend that states and territories aim to set their payment rates higher than the 50th percentile threshold to at least at the 75th percentile of their recent market rate survey. 

The majority of states and territories set payment rates for child care that meet or exceed the 50th percentile, and the OCC and its technical assistance network will continue to partner with states and territories to support full compliance with CCDF policies. See the table below for all state and territory licensed payment rates by provider type and age of child. 

OCC delayed compliance decisions on sufficient payment rates due to the number of lead agencies who requested and received waivers for additional time because of the COVID-19 pandemic to complete market rate surveys and narrow costs analyses. Once amendments were submitted, OCC conducted its review of all relevant CCDF Plan items and related amendments to determine compliance with these provisions. The CCDF Plan is the application states, territories, and Tribes use to apply for their funding and provide a description of and assurances about the Lead Agency’s CCDF program and services. Lead Agencies are required by law to submit Plans every three years. Plans are developed in collaboration with partners to ensure that the CCDF program addresses the needs of families, providers, and communities. States, territories, and Tribes can access additional guidance about the current CCDF Plan online.

For additional information on this announcement please contact OCC at OCC@acf.hhs.gov.

CCDF Lead Agency Reported Licensed Payment Rates as of April 2023 (percentile)

Notes

1. District of Columbia, New Mexico, and Virginia used an ACF pre-approved alternative methodology to set payment rates based on the estimated cost of care. OCC has determined that these payment rates are compliant with determinations for the FY2022-2024 CCDF Plan.
2. Mississippi did not report percentiles.